The amazing metamorphosis of Amazon

Hats off to Amazon again for adopting yet another new innovative business model with this week’s launch of the Amazon Cloud Player and Cloud Driver software and services – and in doing so, it has managed to beat Apple and Google to the punch by being the first to launch online music storage services. Like Apple, Amazon already sells music online, but now, instead of buying and downloading songs onto your computer, you’ll be able to store your music collection “in the cloud” and access it from any computer or Android device (understandably, don’t expect to access it from Apple’s iPhone any time soon) by logging into the Amazon Cloud Player web page.

Take a quick look at Amazon’s ongoing metamorphosis and it’s a remarkable evolution. Amazon started off as a distributor of printed books, videos, CDs and DVDs. Since then, Amazon has shifted its revenue model from selling others’ products to consumers to selling eBooks for its own highly successful Kindle electronic reader (with 2011 sales estimated at 8 million devices), and revolutionalizing the way we read content along the way; it now streams movie and tv content through its Prime subscription model; it provides cloud web services… It also quickly spotted the potential of social media, offering Amazon users the ability to link their Facebook account to their Amazon account so that Amazon could show users recommendations based on their Facebook interests and activities.

Instead of simply reacting to the connected world, Amazon is determined to shape it by continuously pushing the innovation envelope to expand the scope of its customer experience. This has meant moving out of its traditional space and becoming the upstart player that enters and dominates different verticals, using new channels and business models. And with huge success: look at the cloud web services that Amazon started to offer in 2006 – according to the Wall Street Journal, Amazon has “almost single-handedly moved cloud computing to the center of the IT innovation agenda.”

An important part of Amazon’s success lies not only in being so innovative in its technology, business models and strategies, but also in leveraging its long-term relationship with customers (about whom it has collected a huge amount of valuable personal data), and the fact that people trust Amazon to provide reliable, high-quality services. Sound familiar? That’s because most service providers in the communications industry have built up the same unique competencies.

Amazon’s Android App Store offers some unique features that other operators and app stores don’t – for better or worse. The most differentiating is that Amazon will harness its proven recommendations and merchandising tools to improve app discovery – a problem with any mobile app store or merchant. The second is that it will control pricing. Amazon will allow developers to set list prices, but automatically price apps based on the latest market trends – developers get 70% of the sales price or 20% of the list price. Furthermore, Amazon will test all apps before publishing them on its storefront – something Google failed to do which upset its legit developers. It’s also trying some new tactics, such as offering one free premium app a day.

Furthermore it offers retailing apps on the iPhone, mentioned that it will potentially make its app store available on other open-OS devices, and is considering entering the mobile payments market, which includes other segments such as virtual goods, ticketing & m-commerce. In all cases, it dis-intermediates service providers from revenue streams.

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There’s so much going on in the communications industry, it’s easy to get left behind. Amdocs Voices bloggers are spread across the globe, and give their opinions about compelling industry trends, issues and events, as they happen. Whether you agree or disagree, please comment and let us know what you think.